What Is Schedule A Tax Form? And How Does It Relate to Itemized Deductions?
By claiming itemized deductions, you might be able to save additional tax dollars if you choose this route over taking the standard deduction. The amount you save depends on your tax bracket and deductions made.
Yet, many taxpayers are not any of the itemized deductions discussed below are reduced or eliminated. This article will review how itemized deductions were changed, limited, or eliminated as part of the Tax Cuts and Jobs Act (TJCA) tax reform.
What is Schedule A?
For individual taxpayers, Schedule A is used in conjunction with Form 1040 to report itemized deductions. If you choose to claim itemized deductions instead of the standard deduction, you would use Schedule A to list your deductions. Your itemized total is then subtracted from your taxable income.
1040 Schedule A is an optional attachment to Form 1040.
The goal of the schedule is to help walk taxpayers through allowable tax deductions to reduce their overall tax liability.
What Are Allowable Schedule A Itemized Deductions?
Here is a list of allowable Schedule A itemized deductions:
Medical and Dental Expenses
Please note, starting in 2019, medical and dental expenses will be limited to amounts over 10% of AGI.
State and Local Taxes
The itemized deduction for all state and local taxes is $10,000. This will include your state and local income or sales, real estate, and personal property taxes. You can combine all of these taxes to claim a single deduction of up to $10,000.
Mortgage and Home Equity Loan Interest
Tax reform affects mortgage interest deduction amounts.
For mortgages taken out after December 15, 2017, only interest on the first $750,000 of mortgage debt is deductible. For older mortgages, the $1 million limitation still applies.
Additionally, interest on home equity loans, used for purposes other than substantial improvements to your home, will no longer be deductible.
You can claim a deduction for qualified charitable contributions, up to 60% of your AGI; up from 50%.
Casualty and Theft Losses
The deduction for personal casualty and theft losses is limited to losses in federally declared disaster areas. Business casualty and theft losses claimed on business forms and schedules, such as Schedule C, are still allowed.
Eliminated Itemized Deductions
- All miscellaneous itemized deductions subject to the 2% of AGI limit.
- The deduction for foreign real property taxes.
Want Help With Form 1040 Schedule A?
For additional questions or help with completing Form 1040 Schedule A, make an appointment with a tax pro today.
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